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The Root of Our Tax Problem

The Root of Our Tax Problem

By Governor Pete Ricketts

August 27, 2019

 

Governor’s official photo here

 

When cultivating a field or caring for a lawn, Nebraskans know that the only way to tackle weeds is to get to their roots.  Otherwise, the weeds will bounce back—seemingly overnight—in our rich topsoil.

 

The burdensome taxes in this state are like weeds.  They soak up precious resources and choke out healthy growth.  The root of the issue here is to control spending.  It’s time for Nebraskans to roll up their sleeves, dig deep, and take on our tax problem at its roots.

 

Unfortunately, many interest groups only want to make surface level changes to our tax system.  Their proposal is to shift revenues from property taxes to sales taxes without touching the root of the problem—controlling spending.  We’ve tried this in the past, and it hasn’t worked.  Each time, our tax problem has resurfaced a couple of years later.  Why?  Because over the years, government has done very little to root out the actual problem.  We will only see real, sustainable tax relief by controlling spending—both at the state and local levels.

 

We have proof that controlling spending delivers tax relief.  At the state level, we’ve successfully grown our economy and limited state spending to deliver tax relief through the Property Tax Credit Relief Fund.  Before I took office, state spending was growing at 6.5% a year—an unsustainable pace.  During my administration, the state has passed three budgets.  We've controlled spending to limit the average annual rate of growth to 2.4%.  Meanwhile, over the past five years Senators and I have successfully worked together to nearly double the Property Tax Credit Relief Fund.  We've increased direct property tax relief from $140 million to $275 million per year.

 

Despite our significant progress at the state level, property taxes, which are determined by local entities, continue to soar higher and higher.  Nebraskans have an opportunity to work together to do something about local government spending over the next few weeks.  Each year, on or before August 20th, Nebraska county assessors certify taxable property values to local governments like school districts, city and county governments, and community colleges.  These local entities then have one month (from August 20th to September 20th) to set their property tax levies for the coming year and to finalize their budgets.  In other words, now is the crucial time when local spending decisions are being made.  

 

In March, I signed LB103 into law.  It requires local governments to hold a public hearing and take a vote whenever they want to collect more property tax dollars.  This brings greater transparency to situations when rising valuations would cause property owners to pay more in taxes—even without a rise in levy rates.  Thanks to LB103, Nebraskans will now have full awareness whenever local governments want to take in more property taxes.

 

Nebraskans concerned about escalating property taxes should be prepared to attend public budget hearings and make their voices heard to remind local entities to exercise financial discipline.  Again, it’s important to bear in mind that local subdivisions—not the state government—ultimately determine property taxes in Nebraska.

 

Our most populous county already plans to raise taxes on residents this year.  The Douglas County Board proposed a budget on July 30 that raises levy rates to increase its share of the county’s property taxes by 5.3%.  In addition to property taxes going up in Douglas County, the city of La Vista wants to impose a new restaurant tax on residents.   

 

In the Lincoln area, Southeast Community College (SCC) is proposing another major tax hike that would increase its property tax askings (to finance SCC’s general fund) by over 8%.  Back in November 2016 voters resoundingly rejected an SCC bond issue 67%-32%.  Yet in opposition to the will of the voters, SCC’s Board of Governors exercised its taxing authority in 2017 to raise property tax rates by a whopping 21% in a single year!  Now, they want to raise taxes again.  Even though SCC projects its enrollment to decline 4%, the college wants taxpayers to foot the bill on another significant spending increase.  

 

Let’s not wait for the legislative session to pursue tax relief.  Nebraskans can start now by exercising local control, participating in the budget process, holding local officials accountable, and scrutinizing every dollar of local spending.

 

High property taxes demand urgent action that finally gets to the root of the issue.  If you have ideas on how to control local spending, I hope you will share them with me.  I invite you to contact me by email at pete.ricketts@nebraska.gov or by calling 402-471-2244.  Our government is at its best when citizens step up and engage in the budget process.  Over the coming weeks, I hope you’ll attend local budget meetings, pay careful attention to calls for increased spending, and do your utmost to keep local taxes under control.